The Lord Chancellor

Lord Williams of Mostyn: My Lords, we will all wish to welcome my noble and learned friend Lord Falconer of Thoroton as Lord Chancellor and Speaker of this House.

Noble Lords: Hear, hear!

Lord Williams of Mostyn: My Lords, on Monday, with the leave of the House, I shall make a Statement on the Government's proposals concerning the future of the speakership. I think it is better to be made then, when full attendance will be possible and your Lordships will have had sufficient notice.

Lord Strathclyde: My Lords, I thank the noble and learned Lord the Leader of the House for what he has just said. I join him from our side of the House in welcoming the Lord Chancellor, the noble and learned Lord, Lord Falconer of Thoroton, to his position. I want also to pay tribute to his predecessor, the noble and learned Lord, Lord Irvine of Lairg, for the work that he did and, on a personal note, to say that I was always on good terms with him.
	Last evening, there was an angry but short debate in this House about the way in which the Government had handled the whole process. As the House knows, I was not in my place as I had an alternative engagement with the BBC in Newcastle. However, I am very glad that the Government have now responded fully to that short debate by accepting that there should be a Government Statement on Monday. I will reserve everything else I have to say in reply to that Statement and I very much look forward to it.

Lord Tordoff: My Lords, I am not quite sure why I am here to say what I have to say, but I am very happy to do so. Like the noble Lord, Lord Strathclyde, and the noble and learned Lord the Leader of the House, we on these Benches welcome the new Lord Chancellor and wish him well for however long he remains Lord Chancellor, which is very mysterious at the moment but will doubtless come clean in the wash—not the Wash where the baggage was lost.
	I want also to pay tribute to the former Lord Chancellor, with whom I had very good relations when I was Chairman of Committees. He was always very helpful to me and, without any doubt at all, he has been a reforming Lord Chancellor. Despite having a bad press from time to time, he served this House well.
	I do not want to become involved in the argument which took place yesterday, but I am glad that the noble and learned Lord has announced that there will be a Statement on Monday. That is probably as much as I need to say today.

Lord Weatherill: My Lords, on behalf of the Cross Benches, I, too, welcome the new Lord Chancellor and pay tribute to his predecessor, with whom I, too, was on good terms. Perhaps I may tell the Lord Chancellor that exactly 30 years ago today I was told that I was to be Speaker of the House of Commons. I had 48 hours' notice of that appointment, so I have a particularly warm regard for the new Lord Chancellor and wish him a long and happy reign—at least 10 years, like mine.

Lord Williams of Mostyn: My Lords, I am quite sure why I am standing here. With typical generosity, the noble Lord, Lord Strathclyde, paid tribute to the noble and learned Lord, Lord Irvine of Lairg. We all had an enormous regard for his energy and mental capacity. He was a very good Lord Chancellor for a long period in a difficult testing period.
	We can resume our deliberations on this matter on Monday. I am very grateful to your Lordships.

Sunday Working (Scotland) Bill

Lord Hogg of Cumbernauld: My Lords, I beg to move that this Bill be now read a second time. Today is something of an occasion and I am the first Back-Bencher to address the House. I take this opportunity to congratulate the new Lord Chancellor on his appointment and I wish him well in the great office of state to which he has been called. I want to say also how much I enjoyed the tenure of office of the former Lord Chancellor, who has chosen to sit beside me today and listen to the quite excellent speech which I am about to make on the Sunday Working (Scotland) Bill.
	This Bill seeks to rectify the anomaly in the employment rights of shop workers and betting workers in Scotland. It will put an end to the risk of discrimination against them in relation to Sunday working so that Scotland will be in harmony with England and Wales.
	The Bill has been described as a classic Private Member's Bill; short, concise and designed to address the effects of a lacuna in the law which did not extend legal protection to workers in Scotland. Although a small Bill, it has none the less the potential to benefit a substantial number of workers across Scotland.
	I should point out that the Bill does not seek to restrict employers in these sectors when determining how best to deploy their workforce to suit their business needs. The Bill will afford shop workers and betting workers in Scotland the same protections as those in the rest of the country.
	The Bill will make a difference to many thousands of women in Scotland's labour market. Sixty per cent of all employees currently working in the shop and betting sectors are women. Caring and domestic responsibilities still remain largely the responsibility of women, thereby placing them at a disadvantage when either entering or moving within the labour market. The Bill will give them for the first time a greater degree of flexibility in work patterns if they need this for personal or domestic considerations.
	The Bill sits well with the Government's policies on flexible working and encouraging more family-friendly working practices. It removes the need for taking a case to an employment tribunal. It provides the opportunity for people to spend more time with families or attend worship on a Sunday.
	The Bill originated in another place and is the initiative of my honourable friend Mr David Cairns, the Member for Greenock and Inverclyde. It enjoyed all-party support in another place and I believe that it will do so in your Lordships' House. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Hogg of Cumbernauld.)

Lord MacKenzie of Culkein: My Lords, I thank the noble Lord, Lord Hogg of Cumbernauld, for taking charge of the Bill in this House. I support the measure which is designed to deal with the lacuna that leaves shop and betting shop workers in Scotland open to detriment not legally possible south of the Border. The Bill is short and straightforward. It will prevent the manipulation of the present voluntary agreement or convention which is that companies should give the rights enshrined in employment legislation for shop workers in England and Wales to employees in Scotland.
	The genesis of the Bill might be laid at the door of one particular multiple retailer, but if not that company, it would, sooner rather than later, have been some other. Before leaving that point, I pay tribute to the way in which my right honourable friend Helen Liddell, the then Secretary of State for Scotland, dealt with this matter when the company concerned sought to compel many of its workers to work on the sabbath day.
	There is anecdotal evidence that the voluntary agreement is under strain and sometimes that appears to be on initiatives of local managers; in other cases, it is said that there is collusion further up the corporate ladder. I am personally aware of a situation where a department store, which does not normally open on Sundays, nevertheless requires workers to work on a Sunday during stocktaking. I am told that that can sometimes fall on a bank holiday weekend. It is not that the workers in that store do not want to work an occasional Sunday; the issue is that there is a contractual obligation which the same organisation, south of the Border, could not enforce. I shall not name the company; there are too many ways in which detriment might be visited on staffs who, for the most part, are women and sole breadwinners.
	In the real world, in Scotland as elsewhere in the UK, there is generally no shortage of staff who will willingly work on Sundays and there is unlikely to be any negative competitive impact from the Bill, if enacted as set out in the regulatory impact assessment. This is clearly a matter for which there should be a level playing field in all aspects of employment legislation throughout the UK. Staff employed in shops in Scotland should enjoy the same right not to work on Sunday as is the case elsewhere. This Bill will rectify the lacuna on Sunday working and I strongly support it.

Lord Lyell: My Lords, I hope that your Lordships and the noble Lord, Lord Hogg, will allow me 30 seconds in which to congratulate him on bringing forward the Bill. He and the noble Lord, Lord Mackenzie, have explained beautifully that the Bill brings the situation in Scotland on to a level playing field. Perhaps in ignorance, I had thought that the same situation operated throughout the United Kingdom.
	Perhaps in the fullness of time the noble Lord, Lord Hogg, will advise me about betting shops. I am not an habitue of the betting shops in Kirriemuir, let alone on a Sunday. But I am fascinated to think that betting shops are open on a Sunday, particularly as last weekend I was unable to buy alcohol before midday, which showed my ignorance of the law. In due course, will the noble Lord advise me how many betting shops there are and whether they will all open? I would not dream of moving an amendment or causing unnecessary delay to the Bill.
	I add my congratulations to those who have already spoken in this marvellous Scottish festival. Apart from the Leader of the House, we all come from north of the Border. I congratulate the noble Lord, Lord Hogg, and I am very grateful for what the noble Lord, Lord Mackenzie said about the former Secretary of State, Mrs Liddell.

The Earl of Mar and Kellie: My Lords, I welcome the new Lord Chancellor to the Woolsack. I am most grateful to the noble Lord, Lord Hogg of Cumbernauld, for his concise introduction to the Bill, which we on these Benches wish to see on the statute book. Sundays are important for many reasons. It is reasonable to identify a day that is different for recreation and re-creation. How citizens use that opportunity is up to them. The declaratory effect of the Bill is to reinforce in Scotland the longstanding practice that it is important for households to do something different, collectively, on one day of the week, to everyone's benefit, one hopes.
	This is a rare legislative animal: a United Kingdom Bill that affects only Scotland. With constitutional change happening all around us, it is interesting to spot the rare breeds. Despite my bias towards home rule, I have no complaint about this measure being a matter for Westminster. It is sensible for the single British market to be legislated for by Westminster.
	When I arrived here in 1994, the House was consumed with the Sunday trading issue in England and Wales. From the Scottish perspective, all the predictions of England sliding under the waves of degradation and moral decay seemed absurd, but that is par for the course in a union state.
	I must now be complimentary—that takes some doing for me—about the resulting English and Welsh legislation. That is what is needed now in Scotland. The Argos case may have done us all a favour except those citizens who were the victims. The Bill will bring statutory clarity to the issue of Sunday working for shop and betting shop staff. They will be able to negotiate with their employers about Sundays from a position of strength. At least, they will be able to do that on the face of it. It is impossible to guarantee that no employer will use underhand, unofficial tactics to coerce Sunday working.
	Upholding the law will probably rely on trade union activity. Ultimately, workers must make their own judgments—the embodiment of enlightened self-interest. For decent businesses, there will be a small amount of transitional friction, as a few of the staff give notice of their withdrawal from Sunday work, which they currently perform under some duress or at least with some reluctance.
	I expect that decent firms will adopt new practices to accommodate both the spirit and the letter of the Bill when enacted. I would praise those firms, such as B&Q, whose practice is to have a separate Sunday staff; and let us also praise B&Q for its positive attitude towards the employment of older workers. I had better disclaim any significant relationship with B&Q or the Kingfisher Group, and also reflect that while I may still be one of the "young ones" here, I would not be so in the wider employment market.
	The Bill seems eminently reasonable. I am pleased to see that the Committee stage is already scheduled for 1st July. That suggests support from the Treasury Bench for the Bill. I wish it well.

The Duke of Montrose: My Lords, I am very glad that the noble Lord, Lord Hogg of Cumbernauld, has brought this Bill to our House and has given us the chance to discuss the matter. I am grateful this morning to have the opportunity to respond in a personal capacity to a Private Member's Bill and not to speak on behalf of my party, as in that capacity I do not know exactly where I stand. The Minister is perhaps quite safe in his position as the fact that he is asked to speak on regional matters along with Scotland and Wales means that he will be able to transfer quite seamlessly into the new ministry that the Prime Minister invented yesterday. Perhaps we are just one day too early to be able to offer him congratulations on achieving that transfer.
	However, having seen the position of Secretary of State for Scotland so summarily abolished yesterday, I have anxiously waited to see whether Scotland and Wales will rate an Opposition spokesman in your Lordships' House. I had the good fortune to sit next to my noble friend Lord Strathclyde, who made a few reassuring noises to me before he left the Chamber.
	Ever since the Act of Union in 1707, Scotland's relationship with Westminster has been a constantly changing one. Therefore, one cannot complain about losing a traditional constitutional role such as that if we are being threatened with losing the Lord Chancellor. Noble Lords may be aware that the last time such a grand role as Secretary of State for Scotland was abolished was in 1746, only to be restored in 1926.
	It is good to see a Private Member's Bill receive such a charmed passage through Parliament. Although it is obviously a very worthy cause, at the same time one must express regret that it has become necessary. No doubt when it was argued that Scotland should have an opt-out from previous Acts in this field, it was understood that the Scots could be trusted voluntarily to work out these arrangements. Such is the world of takeovers and mergers that it now appears that that is no longer the case. Perhaps it will not be long before we have a chain of French hypermarkets testing out our legislation on shop workers.
	During all those hours we spent debating the Scotland Act, most of the argument was about where legislation should be kept in line between different parts of the UK and where it should be allowed to be unique. The honourable Member for Greenock and Inverclyde in promoting the Bill in another place said that the underlying principle of the Bill is the harmonisation of the law in Scotland with that in England and Wales. It also has to do with workers and their jobs. Therefore, it has the advantage of being seen as satisfactory both from a union and a unionist point of view.
	The noble Lord, Lord MacKenzie of Culkein, has spoken with good knowledge of the shop world. The other great theme that runs through the Bill—a matter pointed out by the noble Lord, Lord Hogg of Cumbernauld—is that this is as another piece of legislation promoting a "family-friendly" approach. It may be harmonising legislation; large shopping chains might even see it as reducing red tape; but I do wonder whether it is all that family-friendly, especially for small rural businesses.
	The Minister in another place was keen to point out that 97 per cent of businesses affected were small to medium but employed only 12 per cent of shop workers. At Third Reading my honourable friend Peter Duncan pointed out that in his constituency 95 per cent of businesses had two or fewer employees. It is not hard to imagine the village shop, which is usually a fairly marginal kind of business, manned by the owner and one or two employees who decide that they no longer wish to work on a Sunday. If the business decides to open on Sunday at all, one can see that probably the only way that the gap can be filled will be to draft in the wife or partner, so both will spend Sunday working. So much for "family friendly", perhaps more a question of, "Whose family?" The Federation of Small Businesses in Scotland highlighted that issue in its response to the consultation.
	I think—and I ask whether the noble Lord, Lord Hogg of Cumbernauld, has considered this issue—it might be worth giving consideration as to whether this legislation should be limited to businesses with a minimum number of employees. I believe that the regulatory impact assessment looked at the effect on businesses of five or fewer employees. That is not necessarily the minimum that could be envisaged in law, but that matter might be addressed.
	That brings me to another point: how will matters be dealt with when such a business looks for a new employee? Would it be guilty of infringing this law if the job specification stated that the applicant should be willing to work on a Sunday if required, though of course I understand that would require him to sign an opt-in agreement? If the employer did not state a Sunday working requirement and it later turned out that he had taken on a less qualified worker who had agreed to Sunday working, could he be challenged by the unsuccessful applicant for discriminatory practices? I know it is not necessarily the Minister's role to answer these questions, but it might be of interest to your Lordships if he could throw some light on these matters. It is very useful for us to look at these points of law as they affect Scotland and to try to bring things into line in a sensible manner.

Lord Evans of Temple Guiting: My Lords, I add my voice to those of your Lordships who have paid compliments to the Bill promoted by my noble friend Lord Hogg.
	We have had a constructive exchange of ideas and information about Sunday working in Scotland, including the likely benefits and impact of the measure. It is timely this morning that we look forward to the next steps we have to take to make sure that we end the clear risk of discrimination which currently exists in Scotland for employees working Sundays in the retail and betting sectors.
	However, first, I pay a particular tribute to David Cairns MP and to my right honourable friend the Secretary of State for Scotland for their tenacity in their support of this Bill. Although short and concise—only four clauses—the Bill has the potential for far-reaching improvements in the employment rights of hundreds of thousands of workers in Scotland.
	The proposals for change highlighted in the Scotland Office's consultation document have been subject to extensive consultation and scrutiny. Responses received indicated overwhelming support for the proposal to harmonise the law in Scotland with that of England and Wales. The Bill itself has also been subjected to extensive scrutiny in another place in an attempt to ensure that workers in the retail and betting sectors in Scotland are adequately protected and that the legislation contained therein will stand the test of time. Indeed, on 7th February, the Government signalled their support for it in another place and have also confirmed that the Bill is compatible with the European Convention on Human Rights.
	My noble friend Lord Hogg summed-up succinctly what we are trying to achieve with the Bill. For that reason, I shall not cover his arguments; rather I would encourage your Lordships to take every opportunity to promote the benefits of the Bill for many in Scotland and to wish it a fair wind in this House.
	The noble Duke, the Duke of Montrose, put yesterday's events in the context of the Bill. It might encourage and reassure him to know that I know as much as he does about the future of the Scotland Office. No doubt we shall both learn a great deal more on Monday.
	We are seeking to harmonise the law in Scotland with that in England and Wales. In answer to the question of the noble Duke, restrictions on the size of the businesses do not exist in England and Wales. The legislation has worked well for seven years in England and Wales, so we anticipate that it will work well in Scotland when passed.

Lord Hogg of Cumbernauld: My Lords, I am most grateful to noble Lords who have taken part in the debate. It has been useful. I am grateful to my noble friend Lord MacKenzie, who brings to the House considerable knowledge of trade union practice and how the matter will be worked out in the workplace. I am also grateful to the noble Earl, who always supports measures that I bring before the House, so I always refer to him as my noble friend. I do so now and am grateful for what he said.
	The noble Lord, Lord Lyell, asked how many betting shops there were in Scotland. As a Scottish Presbyterian I can answer that question: too many. I do not know what is the actual number, but I shall certainly try to find out. It is Ministers' usual practice to say when they cannot answer a question at the Despatch Box, "I shall write to the noble Lord"; but I am new Labour, so I shall send him an e-mail.
	The noble Duke, the Duke of Montrose, raised some interesting questions about family-friendly policies in relation to small business. They were valid and I shall endeavour to find out the answers in time for the remaining stages of the Bill. I commend the Bill to the House and invite your Lordships to give it a Second Reading.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

Contracting Out (Administration of the Teachers' Pensions Scheme) Order 2003

Lord Davies of Oldham: rose to move, That the draft order laid before the House on 28th April be approved [18th report from the Joint Committee].

Lord Davies of Oldham: My Lords, I beg to move that the draft Contracting Out (Administration of the Teachers' Pension Scheme) Order 2003 be approved. I declare an interest. I am a small beneficiary of the scheme, having more than 30 years ago given some service to the teaching profession. I therefore duly record that direct interest in the measure, which I hope will in no way condition my objective position on its merits.
	The order has one main purpose: to update the existing contracting out order made in 1996 and allow for the continued effective and efficient administration of the teachers' pension scheme by a private sector contractor. This is a technical issue. The existing order remains in force, but it needs to be updated to reflect administrative functions that have come into being since it was made.
	Prior to 1996, the teachers' pension scheme was administered by the department. In 1996, the previous government decided to outsource the administration of the scheme to secure better value for money and the significant capital investment, especially in IT systems, that was needed to modernise the provision of administrative services. The 1996 contracting out order allowed for another body to perform the functions of the Secretary of State in relation to the pension scheme under the Superannuation Act 1972 and the Pension Schemes Act 1993.
	The new order will also allow for another body to perform the functions of the Secretary of State conferred by regulations under Section 172 of the Pensions Act 1995. Those regulations are the Teachers' Superannuation (Provision of Information and Administrative Expenses etc.) Regulations 1996, which set out the circumstances in which information may be provided in relation to the mis-selling of pensions and fees charged in connection with the admission of a person into the pension scheme. We propose that those new functions should also be contracted out, as they are fundamentally linked to the main scheme administration and will provide teachers with the most efficient service.
	In addition, the new order provides an opportunity to update the references to the secondary legislation by which the pension scheme is governed, which has changed significantly since 1996. Since the original contract to administer the scheme was placed with Capita Business Services Ltd, it is estimated that the Exchequer has saved £20m compared to the cost of running the scheme in-house. In recent months, we have concluded a re-tendering of that contract and have secured further savings for the next seven years, together with significant improvements in the service provided. In particular, the new contract will allow for increased use of modern IT communication methods and will bring real benefits to teachers, pensioners, schools and employers.
	Prior to re-tendering the contract, the department conducted a rigorous assessment of the merits of continued contractorisation and found that the original case for outsourcing remains convincing and that contractorisation is the most cost-effective method of ensuring that we provide improvements that will benefit all members of the scheme. Consultation with key stakeholders—in particular, teacher unions and employers' representatives—has been an important part of that re-tendering, and all have recognised the benefits that outsourcing has brought. They continue to support outsourcing and the department's choice of contractor.
	Although the order will allow for the continued outsourcing of the administration of the teachers' pension scheme, the Secretary of State will remain ultimately responsible for the management and finances of the scheme. The department will continue to work closely with employer representatives and teaching unions to set the policy for the TPS in a way that supports teachers, employers and the department's wider objectives of improving teacher recruitment and retention. Although the contractor will be responsible for maintaining teachers' records, calculating and paying benefits, and so on, the department retains overall control and ultimate accountability for all aspects of the scheme.
	To ensure the effective delivery of the administration of the scheme by Capita, the department will continue the thorough contract management arrangements that have been successfully developed during the existing contract, together with the involvement of the National Audit Office. Under the new contract, the contractor's payment will be linked to performance, with deductions made if any aspect of the service falls below contractual requirements.
	The order is an updating of the original contracting out order, taking account of legislative changes. It is an enabling measure that allows the Secretary of State to secure effective, efficient and value-for-money administration of the teachers' pension scheme. It allows the department to build upon the successful out-sourcing of the original contract and to deliver further improvements for teachers and employers. I commend the order to the House.
	Moved, That the draft order laid before the House on 28th April be approved [18th report from the Joint Committee].

Baroness Blatch: My Lords, I am grateful to the Minister for his explanation. He could have saved himself a lot of time by simply saying, "Ditto". I followed every single word verbatim from what was said in another place. Nevertheless, I am grateful, because it is important that we hear the explanation in this House.
	I also noted the benefits of having contracted out the teachers' pension scheme in 1996, and the substantial savings that have accrued to the Government since. Not for the first time, however, I was disappointed by the reply given by Mr Miliband, the Minister in another place, to the thoughtful comments and questions of my honourable friend, Graham Brady, Member of Parliament for Altrincham and Sale West.
	Although it is true that Mr Miliband does not have access to the previous government's papers, and can therefore claim not to know why Section 172 of the Pensions Act 1995 was not implemented, he should nevertheless give an explanation of the need for that change. Given that the Government are in their seventh year in office, there must be an answer to the following questions.
	First, why was it not thought necessary to enact this provision after entering office in 1997, especially as other orders relating to the issue have been passed since then? Secondly, what is the specific reason for the enactment now? Has the scheme been found wanting in some way? What has been the inhibiting effect of not having incorporated Section 172 of the 1995 Act?
	Thirdly, given that the omission of the section has lasted for seven years, has the effect of that been felt by the department, teachers or the private contractor? If the answer is no, why the change? If there has been a problem, please put it on the record today. That would at least compensate for the lack of information from Mr Miliband and the inadequate Explanatory Notes that accompany the order.
	My honourable friend Graham Brady also asked what would be the practical effect of the order. For example, does it allow the Secretary of State to authorise another person to carry out the functions? Given that for the past seven years the teachers' pension scheme has been contracted out, therefore functions have been carried out by "another person", what additional functions can be transferred as a result of the order? What effect will that have on accountability for the scheme? Will there be any practical impact on teachers' pensions? Again, if the answer is "none", what is the point of the order?
	I understand that the contract with Capita has been renegotiated. Was that in competition with other providers? Was there a special competitive process to renegotiate the contract? Given that the contract has only recently been re-let, were those changes anticipated and taken into account at the time of agreeing the contract?
	The Minister will know about the enormous disquiet about school funding. Ministers, particularly Mr Miliband, have argued forcefully that the money given to schools this year is greater than the cost pressures in school budgets; that is, the increase in national insurance, increases in salaries, special increments, inflation and employers' pension contributions. Yet, when my honourable friend Graham Brady asked in a Written Question on 14th April what was the additional cost of the increased pension contribution in total and for each local education authority, astonishingly Mr Miliband answered:
	"It will not be possible to calculate the additional cost of the increase in employers' contributions . . . for each local education authority for 2003/4 until we have analysed the contributions data for March and April 2003".—[Official Report, Commons, 19/5/03; col. 569W.]
	As most schools knew, the cost pressures of increased pension contributions were considerable. Given Mr Miliband's answer, he could not possibly claim that they were fully taken into account. If he did not know the additional costs, how could he have taken them into account?
	Only yesterday, I visited a school where the pension increase was over 5 per cent. The issue of pensions and their affordability, and the read-across to the importance of recruitment and retention of teachers, is important. Therefore, the questions that I posed, which were either not answered or only cursorily answered in another place, should be answered today for the record.

Lord Davies of Oldham: My Lords, I am grateful to the noble Baroness for her response to the order. In answer to her first question, as she will recognise, it is necessary to introduce the order now because initially it was widely believed that the existing contracting out order covered work, which Capita carried out, on the position of teachers who were mis-sold a personal pension. As Capita administered the databases of teachers' records on behalf of the department, only it could provide the information needed to resolve cases of mis-selling.
	It is now recognised that the re-tendering of the contract is an appropriate point at which to introduce the new functions in the contracting out order to guarantee that we have adequate, proper information on how the pension scheme works. It takes place against a background of widespread anxiety across all sectors about the mis-selling of pensions, which the noble Baroness will recognise. It behoves the public sector to take every possible measure to ensure that the problem is resolved. The measure represents a tightening-up of the position and a guarantee that the order makes clear the terms on which Capita applied and eventually obtained the new contract. It guarantees future security.
	The order's practical effect allows Capita to administer to mis-selling provisions with proper statutory cover. There is no undue effect on the scheme's members. It ensures that we have proper statutory backing for the operations of Capita as an agent of the department.
	I recognise the noble Baroness's final point. I thought that it would probably not be possible to discuss any aspect of the current education scene without the noble Baroness referring to the budget. She will also recognise that the base on which the full and accurate obligations on teachers' pensions are calculated cannot be given with the kind of precision required in a Written Answer, as my honourable friend in another place indicated clearly, but it can be given in general terms. There is a general recognition of the implications of teachers' pensions for the total budget. There is not a precision calculation for every school—that needs to be worked towards—or for each local authority. That was allowed for in the grant.
	The noble Baroness berates the Government for their very substantial increase in schools' provision on the grounds that it is inadequate, while all her friends in another place stress their intention to bring public spending down by 20 per cent. That will impact somehow on the education budget, otherwise it will be unachievable. So I will not take her diatribes about the Government's weaknesses in this area, given that it is generally recognised that the cost of the pensions increase was to be borne by schools. Due regard was paid to that.
	I am all too aware of the difficulties of some schools. Nevertheless, the very significant, double-figure increase in allocations to schools took account of aspects of the pensions position. I cannot pretend that all issues relating to schools are resolved, as the noble Baroness knows only too well. But the Government's generosity towards schools cannot be matched on the other side, given its present disposition towards expenditure.

Baroness Blatch: My Lords, clearly, I touched a nerve with the noble Lord. The 20 per cent cut that he talked about is simply not true. The Minister need not worry about my sensitivities, as I am not a teacher or a headteacher trying to run a school. Tell that to the lady headteacher who is going to do a parachute jump to raise money to save sacking a teacher this year. Tell it to the teacher who will work a four-day week to save money to pay for teachers in his school. Tell it to the school in Barnet that is likely to go bankrupt. They are the people to be concerned about, not my sensitivities.
	I shall return to my questions on the order. Taking no advantage of previous orders that have been placed before the House since 1997, the noble Lord's explanation for the order was: "This will give it proper statutory backing". Does that mean that there has not been statutory backing for the advice and information required to cover the issue of mis-selling for six and a half years? If so, it is a desperate situation. Perhaps the noble Lord ought to have seen it when the party first came into office. They have been to the Dispatch Box and passed orders since 1997. The noble Lord and the Minister in another place have not satisfactorily explained why, almost seven years after the event, this order should be so necessary.

Lord Davies of Oldham: My Lords, the order is necessary because the pensions situation has changed significantly. The noble Baroness will recognise the anxieties in recent years over the mis-selling of pensions. Substantial legislative changes to pensions have taken place across the board. We have taken this opportunity to ensure that the teachers' pension scheme is as secure as possible and that it guarantees that the necessary aspects are covered so that there is proper accountability for the pensions position, thus ensuring that the scheme operates at its best.
	I hear what the noble Baroness says about the difficulties that schools face, but she might also be able—just now and again—to dredge up a little credit and acknowledge that part of the issue that confronts schools is a substantial increase in the pay of teachers, particularly those who increase their pay through improved performance. We introduced that measure in order to ensure that we rewarded good teachers better than in the past and could attract people to the profession in the way we needed to do, given the pressures on the system.
	Those provisions cost considerable amounts of money. No one doubts that school budgets are stretched by additions to teachers' pay. All I can say is that we are proud that we have taken decisions in those terms. We wish that the Opposition would from time to time recognise that improvement in the position of teachers and also tell us how they would square their commitments to reduce public expenditure with meeting the need for the same kind of provision.

Baroness Blatch: My Lords, it is interesting that the noble Lord has to resort to such an argument. Teachers have had to be sacked to pay for the changes. Was that the Government's intention?

Lord McIntosh of Haringey: My Lords—

Baroness Blatch: My Lords, there is no law against my coming back on that. There is nothing on the Order Paper that says I cannot.

Lord McIntosh of Haringey: My Lords, of course there is not, but the order is about pensions, not about school budgets in general.

Baroness Blatch: My Lords, my point is about pensions. The increase in pension contributions—that is what the order is about—was responsible for leaving schools unable to cope. The noble Lord said that the remedy for the problem of statutory backing was to take part of an order that was passed in 1996 as part of the enactment. That could have been done much earlier in the previous Parliament.

Lord Davies of Oldham: My Lords, we could probably continue the debate for a considerable part of the afternoon. The order has been brought forward now because, as I said, there have been anxieties about pensions, which the noble Baroness will recognise. It is necessary to make the changes, not because there has not been statutory backing for the Secretary of State's position with regard to pensions but because we need to secure the position of the contractor—Capita—in order to make sure that the issues relating to the mis-selling of pensions and the financial dimensions thereof are covered, as far as concerns the contractor.
	The noble Baroness may well argue that that might have been foreseen seven or eight years ago: a great deal of other work on pensions might have been foreseen several decades ago. Perhaps the previous administration also missed things. As a society, we have gone through a difficult time with pensions issues, and it is by no means over yet. If we have the opportunity to give security to the teachers' pensions scheme, we owe it to the teachers and to their employers to provide that security. That is what the order does.

On Question, Motion agreed to.

Aviation (Offences) Bill

Lord Corbett of Castle Vale: My Lords, I beg to move that this Bill be now read a second time.
	Noble Lords will be aware that disruptive or anti-social behaviour by passengers on aircraft has hit the headlines in recent years. Incidents of air rage, as it is commonly called, tend to be widely reported to the extent that the public may fear that that sort of behaviour is more common than it really is. In fact, the chances of anyone encountering a serious incident of disruptive behaviour on an aircraft are very slim. Nevertheless, being confronted with drunken, loutish or aggressive behaviour is an unpleasant and frightening experience, particularly when it takes place in a confined space at 30,000 feet. In that environment, should incidents of unruly behaviour get out of control they could ultimately threaten the safety of the aircraft and the lives of all those on board. The problem must not be exaggerated, but neither should it be trivialised.
	The Bill starts from the position that there are several offences in United Kingdom law that relate to disruptive passenger behaviour on aircraft. However, none carries statutory power of arrest. The police have identified that as a deficiency that can cause practical problems for them and may sometimes make prosecution of offences less effective. The Bill would address that deficiency, giving the police the power to search and arrest those suspected of committing criminal offences at airports or on aircraft. In addition, the Bill would allow for an increase in the penalty for the most serious offences—endangering the safety of the aircraft or any person on an aircraft—from two to five years in prison.
	I am grateful to the Department for Transport for telling me that 1,055 incidents were reported by domestic airlines in the year to 31st March 2002—a drop from 1,250 incidents in the previous 12 months. They ranged from relatively minor incidents, such as arguing with other passengers or robustly criticising the service, to serious and disruptive misbehaviour. The Civil Aviation Authority classed 528 incidents—roughly half—as significant, and a further 52 as serious. That represents a slight increase in the percentage of incidents judged to be significant.
	Happily, in the year to last March, no reported cases of disruptive behaviour contributed to an aviation accident, although there were some that involved actual violence against cabin crew. Some 77 in every 100 incidents involved male passengers—a figure that has been constant over the past three years. Most offenders were in their 20s, 30s or 40s. About one-third of the incidents involved passengers travelling alone. Some 21 incidents involved groups of 10 or more people, with five in every 100 incidents taking place—perhaps surprisingly—in business or first-class seating. Violence was involved in about 10 per cent of all incidents.
	It is no surprise that passengers suspected of being under the influence of drugs or showing signs of excessive alcohol consumption were involved in most of the 52 serious incidents. Alcohol was involved in 45 per cent of all the reported incidents. Verbal warnings—or yellow cards—worked in 44 per cent of the incidents but not in 35 per cent. In 16 incidents, a passenger had to be physically restrained by handcuffs and/or a strap, and in a further nine other forms of restraint were used such as having a cabin member sit next to the passenger for the rest of the flight. On six occasions, the aircraft had to divert when in the air, and on three, the aircraft had to discontinue taxi or take-off procedures and return to its stand.
	There were 155 incidents in which passengers were either refused boarding, usually because of drunkenness, or entered the aircraft but were subsequently disembarked before take-off—an increase on 141 incidents for the previous year.
	Such figures make the point that all airlines have and use legal rights under their conditions of carriage to refuse carriage to any person or to off-load him or her at any airport en route if it is felt that the safety of the aircraft or the health or safety of any person on it might be endangered. I am grateful to British Airways for sending me a copy of its policy for dealing with disruptive passengers. I am pleased that its overall policy states:
	"British Airways has a policy of zero tolerance towards disruptive passengers of all kinds. The airline therefore supports ground staff and crews who prevent such passengers from travelling on flights".
	Since last March, British Airways has issued 27 lifetime bans on disruptive passengers. Sixty-four passengers have been banned for up to 12 months and 19 have been given written warnings about their behaviour.
	Virgin Atlantic Airways has a similar policy, but sent it to me asking that I keep the details confidential. However, like British Airways and other airlines, it is "very supportive" of the Bill. However, Virgin Atlantic tells me that since last June there have been 37 incidents of disruptive behaviour in-flight involving men and 11 incidents involving women.
	I should perhaps put all this in context. The chance of an individual passenger boarding a flight on which a serious incident may take place is about one in 22,000. Only one in every 2 million passengers has been the cause of a serious disruptive incident. But we need to remember that the risk to ground staff and crews is substantially greater than it is to passengers.
	The origin of the Bill dates back to 1998 when the Association of Chief Police Officers commissioned a group of senior police officers working at UK airports to investigate the adequacy of powers to deal with aircraft and airport offences. The ensuing report, published in January 2000, concluded that the powers of the police and courts to crack down on air rage offences were inadequate. It highlighted that the police were prevented from taking effective action because they did not have the necessary powers to search and arrest those suspected of committing offences on aircraft or at airports. It also found that a number of potentially serious offences carried relatively minor penalties.
	Where an offence does not carry a statutory power of arrest, the police may only arrest suspects if they are likely to injure themselves or others or if their identities cannot be established, which is unlikely with airline passengers as they would be carrying passports. In most cases the police are therefore restricted to taking a name and address and reporting the offender for summons.
	The lack of powers to detain suspects creates a number of practical problems. It means that the police are unable to search, fingerprint or question suspects or to take witness statements. For charges to be made, the police must travel to the suspect's address and call in witnesses who are likely to live in dispersed locations, thereby using valuable police time.
	The Bill would put into law the recommendations made by the Airport Police Commanders in respect of in-flight offences. Clause 1 introduces police powers of arrest to deal with drunk or disruptive passengers on aircraft. In England and Wales, an arrest by a police constable without a warrant can be made only if the alleged offence committed is classified as being arrestable under the Police and Criminal Evidence Act 1984. To be arrestable, an offence must carry a maximum penalty of five years or more. The offences cited carry a maximum two-year penalty only. In order to make these offences arrestable, it is therefore necessary to include them in a list of specific arrestable offences.
	Since the Police and Criminal Evidence Act does not apply to Northern Ireland and Scotland, equivalent provisions are made in order to make the offences arrestable there. As the primary purpose of the Bill is aviation security, I understand that the Scottish Executive has accepted that this is a reserved matter.
	Clause 2 changes the Civil Aviation Act 1982 to allow the possibility of introducing a maximum penalty of five years for an offence relating to endangering an aircraft or a person in an aircraft. This is clearly a very serious offence in comparison to drunkenness or disruptive behaviour and a two-year penalty seems insufficient. Increasing the maximum penalty to five years would automatically make this offence arrestable in England, Wales and Northern Ireland. In Scotland, policing legislation is different and it is necessary to add this offence to the list of offences in Clause 1(3) which are to be automatically arrestable without warrant in Scotland.
	The Bill is short and modest in its scope. But the changes that it proposes would undoubtedly make enforcement of the law more effective in an area which potentially affects many people. It would implement recommendations made by the police and, as the Bill's sponsor, my honourable friend the Member for Motherwell and Wishaw, made clear in another place, it commands support from across the whole airline industry and all-party support in the House of Commons. I hope that noble Lords will agree that this is a sensible proposal. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Corbett of Castle Vale.)

Baroness Trumpington: My Lords, it was sheer luck that I happened into the Chamber when this Bill came up. I support it very strongly and I hope that the Government do so. My reason for being particularly interested is that for at least six years I served as a member of the Air Transport Users' Committee, ending up as its chairman. I therefore have a certain amount of knowledge in this area. I do not think that the noble Lord asked the advice of that particular committee. It has infinite experience which would be worth taking on board. I wish the Bill very well. If there is anything I can do, please let me know.

Baroness Thomas of Walliswood: My Lords, I am happy to welcome the Bill from these Benches. I agree with the noble Lord, Lord Corbett, that although the offences dealt with in the Bill may not affect many passengers, they are nevertheless extremely serious in the context of aviation safety as a whole and that of the crew in particular.
	The Bill comes to this House after a long debate in the House of Commons and with the support of the Government. The purposes of the Bill have been clearly explained today—namely, to increase penalties for certain existing offences and to enable the police to arrest people who are implicated in such offences when they land at an airport. It also calls for witness statements from crew or passengers who are present when an alleged incident takes place. That would enormously strengthen the power of the police to deal with these offences.
	My right honourable and honourable friends in another place support this Bill and its extension to Scotland. In the unavoidable absence of my noble friend Lord Bradshaw, from these Benches I am delighted to welcome the Bill to this House.

Lord Cope of Berkeley: My Lords, my noble friend Lord Astor has been delayed. That is why I am appearing in his place. The noble Lord, Lord Corbett of Castle Vale, has made a very strong case for the Bill. Obviously, it already has my party's support. The figures he quoted show that, generally speaking, airline passengers are as well behaved as almost any identifiable group one can imagine—apart, of course, from Members of your Lordships' House who are invariably well-behaved. But, of course, it is also the case that when people misbehave on aircraft, the consequences can be very serious. It is therefore right that there should be proper measures to deal with those who misbehave. I support the Bill.

Lord McIntosh of Haringey: My Lords, the Government take very seriously the problem of disruptive passenger behaviour on aircraft. It became a matter of increased public concern when there was a serious incident in 1998: a stewardess was attacked and injured on board a UK aircraft. After that incident—which I am sure the noble Baroness, Lady Trumpington, will remember—the Government took action in two ways. First, we set up a disruptive passengers working group, chaired by the Department for Transport and including representatives from the Civil Aviation Authority, the Home Office, the police, airlines and unions.
	We keep regular contact with the Air Transport Users' Committee and it is aware of this Bill. I could not say positively that it has approved it, but it is aware of it. The group's remit is to advise Ministers on measures to minimise the frequency and potential impact of disruptive behaviour on board aircraft. Secondly, on the advice of the group, we introduced a standardised reporting scheme for incidents of disruptive behaviour on board UK aircraft. There was little hard evidence at that time and it was agreed that statistics were necessary to establish the nature and scale of the problem. My noble friend Lord Corbett has given, in considerable detail, the statistics on "air rage". Indeed, it is true that it is not as widespread as one might sometimes think from reading the newspapers. I suppose that that is because some disruptive passengers are what are called celebrities who often appear in the tabloids. I suspect that they are category B or C celebrities rather than category A. It is true that there were 52 serious incidents only in the last year for which figures are available—that is, incidents threatening flight safety or personal safety or having the potential to do so.
	Any incident of anti-social behaviour, however serious, can be an unpleasant and frightening experience for those affected. As my noble friend Lord Corbett remarked, cabin crew are more vulnerable because they fly so much more. We want to ensure that incidents become rarer in the future.
	UK legislation to deal with offences committed on board aircraft is among the most comprehensive in the world. There are a number of specific offences relating to behaviour in aircraft, as set out in the Air Navigation Order 2000. These are: endangering the safety of an aircraft; being drunk in an aircraft; smoking when prohibited; disobeying a lawful command by the commander of an aircraft; and acting in a disruptive manner, which includes interfering with cabin crew in the course of their duty.
	In addition to those offences, normal criminal law applies on board UK aircraft and powers exist to act against offenders on board non-UK aircraft whose next destination is the UK, provided that the act committed is an offence under both UK law and the law of the state of registry of the aircraft. We are encouraging the International Civil Aviation Organisation to persuade more states to enact these where they do not already have them.
	As my noble friend said, it is essential that offences can be adequately enforced and that the penalties are appropriate. There is a consensus that the maximum two-year penalty is not proportionate. In at least one case, a judge has commented that he would have imposed a longer sentence if one had been available. So it seems appropriate to raise the penalty to five years, which also has the effect of making the offence arrestable by statute. The police have had concerns that their powers are not always sufficient for some of these offences and I can confirm that this has sometimes prevented them from taking effective action. They have asked for their powers to be strengthened to allow certain other offences to become arrestable by statute, but without increasing the penalty.
	I can confirm that all those working in the airline industry are supportive of these changes, which have also been welcomed by the Government's disruptive passengers working group. We wish to see effective prosecution of the offences and appropriate punishment. The fact that these serious incidents are rare does not undermine the rationale for the Bill. Even if only a handful occur, it is still important that each incident can be followed up effectively by the police. For cabin crew members or passengers who have been the victim of a disruptive behaviour offence, it would be unacceptable if the offender were not prosecuted because of difficulties in gathering evidence long after the incident had occurred.
	The Bill will help to achieve the aim of more effective prosecution. I am grateful to my noble friend Lord Corbett for promoting the Bill and I am happy to record the Government's support for it.

Lord Corbett of Castle Vale: My Lords, I thank my noble friend for welcoming the Bill and, in more practical terms, for confirming the Government's support for it. I thank also those noble Lords who have been kind enough to support the Bill. I am flattered that the Opposition Chief Whip should have graced our proceedings for the reason he explained.
	The noble Baroness, Lady Trumpington, made the point beautifully. One of the first pieces of advice I was given when I came into your Lordships' House was to be very careful when speaking because it was an absolute certainty that there would be someone in the audience who would know more about what you were talking about than you did yourself. I am grateful to the noble Baroness. If the Bill is given a Second Reading, then between today and the remaining stages I shall have a word with the Air Transport Users' Committee.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

Marine Safety Bill

Lord Donaldson of Lymington: My Lords, I beg to move that this Bill be now read a second time. The Bill has come to us from another place, having been sponsored there by Dr Brian Iddon, the Member of Parliament for Bolton South East.
	The overall purpose of the Bill is to increase safety at sea and to reduce the damage that can be caused by pollution from ships. We have seen all too plainly, with the sinking of the oil tanker "Prestige" off the coast of Spain late last year, the severity of the damage that can occur when such vessels get into difficulty.
	Members of your Lordships' House may remember too that the United Kingdom has itself suffered some devastating oil spills. Nearly 40 years on, the name "Torrey Canyon" still conjures up images of polluted beaches and dead wildlife. The UK has suffered other large spills, the "Braer" in 1993 and the "Sea Empress" in 1996. It was the "Sea Empress" incident that led to the inquiry and report entitled the Review of Salvage and Intervention and their Command and Control, of which I had the honour of being the principal author. It introduced an entirely new system for intervention in the case of polluting or potentially polluting incidents in United Kingdom waters as well as those of the EEZ. Furthermore, I am glad to be told that it is working successfully. However, the report did identify two aspects where the legislation was inadequate and this Bill is designed to close those loopholes.
	Under Section 137 of the Merchant Shipping Act 1995, as amended, the Secretary of State or his representative, known by the inelegant title of SOSREP—only because we could not think of any other term which did not have undesirable overtones of one kind or another—can give directions to the owner, master or pilot of a ship, any salvor in possession of the ship and where the ship is in waters regulated or managed by a harbour authority, to the harbour master or to the harbour authority. The powers may be used to prevent or minimise pollution or the threat of pollution following a maritime accident, and to prevent or reduce a risk to safety.
	However, neither the Secretary of State nor SOSREP—in practice of course it is SOSREP—can issue a direction to the riparian owners and managers of facilities such as berths, wharves and jetties to require them to make their facilities available so that action may be taken to help the vessel. This Bill makes good that deficiency. Paragraph 2 of Schedule 1 to the Bill confers a power on the Secretary of State to give directions to those in charge of land or coastal premises to make that land or certain facilities such as berths, wharves or jetties available in order to reduce or prevent the risk of pollution and any risks to safety.
	This may have financial consequences, which is why the Bill required a money resolution in another place. If, by being directed by the Secretary of State or his representative to accept a stricken vessel, a facility is effectively stopped from carrying out its normal day-to-day business, then Clause 15 makes provision for anyone suffering loss or damage to be properly compensated by the Secretary of State. This is right and just and, furthermore, I understand that it is a necessary provision in order to comply with the requirements of the European Convention on Human Rights.
	Fortunately, there are likely to be few occasions on which the power will need to be exercised, but when it is required, it will be needed very badly. However, because it is so difficult to predict how often the power will need to be exercised, it is impossible to predict with any accuracy the level of compensation involved. It would depend on the type of facility being affected, the availability of alternative facilities and, of course, how long the casualty occupied that facility. A jetty serving an oil refinery, for example, may involve far greater sums than a jetty used occasionally for leisure purposes.
	However, the costs of dealing with oil spills run to many millions. In today's value, I am told that the cost of the "Torrey Canyon" spill would be £76 million. If this measure is used only once to prevent a large spill, then the savings would far outweigh any compensation involved.
	The second provision of the Bill concerns fighting fires at sea. Clause 2 amends the Fire Services Act 1947 by including a provision giving fire authorities the power to recover costs they incur in fighting fires at sea outside the area of any fire authority. The fire might be on a ship, an oil rig or another structure such as a pontoon. Between 1991 and 2001, 347 fires were recorded on ships in United Kingdom territorial waters. Of these, at least 12 could have resulted in significant loss of life were it not for the assistance that fire teams were able to give after being airlifted to the scene. Such teams are specially trained; they do not consist of ordinary firefighters.
	After a three-day fire on the ro-ro ferry "Kukawa" in 1997, an arbitrator, in an appeal dealing with the salvage claim, took the view that the fire service's claim to recover costs was inadmissible. This was an unfortunate decision. No one had ever raised the point before and it was a pity that it was raised on that occasion. However, the arbitrator's decision was a serious setback to fire-fighting at sea and we have now seen fire authorities revoking their declared facility status because of funding problems. We need the clause to encourage fire authorities to continue to provide this expert and life-saving service.
	Another product of the Bill is to consolidate existing powers into one piece of legislation.
	If the Bill is enacted it will add a powerful tool to the Secretary of State's representative when tackling a major pollution or safety maritime incident. It will give firefighters an incentive to provide help at sea and provide a useful one-volume key reference document for rapid access when quick action is needed, although the SOSREP will not need to refer to the document because it will be present in his mind. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Donaldson of Lymington.)

Baroness Thomas of Walliswood: My Lords, to respond from the Front Bench on a debate about safety at sea, in which the noble and learned Lord, Lord Donaldson, is the leading speaker, takes me back to my earliest days in your Lordships' House when the "Sea Empress" disaster and the possible re-opening of the "Devonshire" inquiry were both on the agenda. I remember how daunted I felt at having to take part in debates on these matters in the presence of the noble and learned Lord. While I no longer fear him, we all respect his great authority in this field.
	The Bill has come to us from the House of Commons with the support of the Government and that of many Members of Parliament, including several of my honourable friends. As the noble and learned Lord said, the Bill deals with the important subject of marine safety and gives the Government the additional powers recommended by the noble and learned Lord in his review of salvage arrangements following the "Sea Empress" disaster near Milford Haven. As he said, the Bill fills a recognised gap.
	The Bill also provides for the reimbursement of fire services which deal with fires at sea. Until I took an interest in the Bill I had not realised that the number of fire brigades willing to undertake the training and maintenance of services able to cope with fires at sea was reducing. That is an important aspect of the Bill.
	As I have explained, my noble friend is not in his place. Nevertheless I am sure that we shall continue to support the Bill from these Benches.

Viscount Astor: My Lords, we support the Bill. I apologise to your Lordships for not being present during the debate on the previous Bill even though my name was on the list of speakers. I attended a memorial service this morning and the speakers in that debate were rather briefer than I had imagined they would be. I apologise for missing the debate but I understand my noble friend the Opposition Chief Whip stood in for me.
	After his report on the "Sea Empress" disaster at Milford Haven, the noble and learned Lord is indeed the father of the Bill. That report was published in 1999 and so, in government terms, to have a Bill in 2003 is rather rapid progress.
	Apart from one small complaint I have absolutely no criticism of the Bill. The noble and learned Lord mentioned the word "SOSREP". It is a pity that we invent such extraordinary acronyms that we shall have to remember in the future.
	As the noble and learned Lord said, the Bill fills a need. However, we have an obligation to press the Minister on the issue of funding. The Bill quite rightly gives the fire services the ability to charge for attending fires at sea, but in order to do that satisfactorily they have to have the training and the necessary equipment in their possession. This means that they will have to spend money to equip themselves to fight marine fires—and that money will have to be spent whether or not there is a fire—and we know that the funding the fire services receive for fighting marine fires has been cut.
	If this is going to work, it is important that the Minister tells the House what guidance the Government are giving to the fire services in various locations on the levels of equipment they should maintain to deal with disasters. There is no point in fire authorities being allowed to charge for their services if they do not have the equipment to deal with incidents. I hope that the Minister will be able to answer that point.
	We support the Bill and will encourage its passage through the House.

Lord McIntosh of Haringey: My Lords, as has already been said, the Government support the Bill. We congratulate the noble and learned Lord, Lord Donaldson, on introducing it.
	The United Kingdom has 10,000 miles of coastline. We are adjacent to one of the busiest sea lanes in the world— there are some 400 vessel movements per day through the Dover straits—so we have to make maritime safety and the prevention of pollution among our top priorities.
	The noble and learned Lord, Lord Donaldson, referred to the "Torrey Canyon", the "Braer" and the "Sea Empress" incidents—which were very serious indeed—and outlined the Bill's provisions in detail, so I do not need to go into that again.
	At present the powers of SOSREP are significantly lacking in that a damaged vessel may be directed into a port area, but if the private owners of the facility refuse to help offload the vessel, or perhaps bring it alongside so that a fire could be fought from shore, the risk presented by the casualty will remain. Indeed, such delays could allow precious time to be wasted and the situation to get worse. This would add risk to the coast and the community.
	I understand that there have been two examples of vessels being refused access to port facilities during the past three years. One of these involved the MT "Framness". Last July she was refused access to her privately owned discharge facility within the Port of Milford Haven when it became known that had her engines been stopped they may have needed repairs before they could have been restarted. In this condition she was returned to sea, in worsening weather, presenting a risk of becoming a casualty with resulting massive pollution. SOSREP was not able to remedy this situation. He had to rely on his powers to require tug support to be provided to the vessel until repairs could be effected.
	In another case the vessel "Dole America" was holed when she struck the Nab Tower, which is a navigational aid—and not a small one—off Southampton in the early hours of 7th November 1999. There was a 13 metre gash below the water level on her starboard side. The vessel was grounded and subsequently refloated before being taken into the Port of Southampton, where the intention was to place the casualty into an available, but privately-owned, dry dock so that temporary repairs could be undertaken and the vessel could be removed to the continent for full repair.
	Permission to use the facilities at commercial rates had been agreed in advance of the refloating but was retracted as the vessel entered port. This could have been for reasons of commercial gain. However, the result was that the ship had to be held alongside a quay, supported at all times by a crane, while the best repairs possible could be completed before the vessel was taken to Portsmouth for further securing before being allowed back to sea. The effect of the private owner's refusal of facilities was that a vessel offering potential risk to safety and the port environment was held against a commercial berth for an extended period of time. We also know of a number of incidents where access to private facilities was given but could just as easily have been withheld. These safety matters are reserved and this provision shall apply across the United Kingdom.
	The second measure concerns maritime firefighting. I was surprised to learn, as the House will be, that only 10 firefighting authorities provide any sort of maritime service. Indeed, there are only two between Essex and the extreme north of Scotland—Lincolnshire and Humberside. The position on the west coast is not much better.
	In 1997, some 20 firefighting authorities provided a marine service. I cannot say that I have evidence that this 50 per cent reduction was entirely due to cost, but I suspect it was a principal factor. However, I have to give the lie to what the noble Viscount, Lord Astor, said about funding. There has been no cut in firefighters' funding. He will recognise that the Bill does not make it a duty for firefighters to work at sea, but it removes the burden of cost that is likely to make it more likely that more authorities will withdraw this service. An article in the May edition of the magazine for NUMAST members, the Telegraph, showed that a recent analysis of the costs of 68 shipboard fires added up to some £37 million—an average of £550,000 per incident. So we are not making it compulsory but we are removing a major disincentive.
	I take the point of the noble Viscount, Lord Astor, that to fight fires you have to have some basic training and equipment. However, my understanding is that it is more training than equipment, and there is not so much capital cost involved in being prepared to fight fires. We are giving additional encouragement to firefighting authorities to undertake the training and the capital expenditure that is required on the basis that they will now, reversing the arbitrator's decision, be able to recover the cost from individual incidents.

Viscount Astor: My Lords, I am very grateful to the Minister for giving way. Perhaps I did not make it entirely clear in my speech. I did not say that there had been a cut in the funding of the fire service—at least, that is not what I meant to say. I meant to say that I understood that there had been a cut in the resources that the fire services had put in to fighting marine fires.
	Can the Minister tell us—and, if not now, perhaps he would be kind enough to write to me—whether the Government feel that the number of fire services that have the equipment and the training is sufficient to cover the stretches of coastline along the United Kingdom? What mechanism does the Government have to ensure that there is, within the various fire authorities, enough cover for our coastline?

Lord McIntosh of Haringey: My Lords, as I say, there has been no cut in the funding of fire services. I am not aware that there has been a decrease in expenditure by fire authorities in dealing with marine fires, but I can write to the noble Viscount, Lord Astor, on that point. I made it clear that there has certainly been a cut in the number of firefighting authorities providing this maritime service. It is our belief that restoring the right to recover costs should encourage enough firefighting authorities to provide an adequate service around the coast.
	We welcome these provisions, which will encourage, but not force, fire authorities to continue to provide this expert and life-saving service. This part of the Bill applies only to England and Wales. Scotland and Northern Ireland will have to introduce separate legislation if they wish, and I understand that they are both keen to do so.
	We do a great deal to promote maritime safety and minimise pollution at sea. The Bill, with the two measures that have been described and the consolidating of existing provisions into a single document, is most welcome, and we support it.

Lord Donaldson of Lymington: My Lords, I thank all those concerned who have supported the Bill. The noble Viscount, Lord Astor, said that fire services will have to spend money in advance of an incident and asked how they get it back. The answer is that we are dealing with salvage. In the law of salvage, it has always been accepted that salvors, some of them operating on spec, will incur considerable costs. Those costs have always been taken into consideration in making an award of salvage.
	I do not doubt that, in the light of this Bill, once salvage arbitrators know that the fire services can—and undoubtedly will—put in a claim for what is euphemistically called their costs, they will take a generous view, for the same reason that they take a generous view when remunerating salvors. It is in the interests of the maritime community that people are available to render this service when necessary.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

Race Relations Act 1976 (Seamen Recruited Abroad) Regulations 2003

Lord McIntosh of Haringey: rose to move, That the draft regulations laid before the House on 14th May be approved [20th report from the Joint Committee].

Lord McIntosh of Haringey: My Lords, the regulations to amend Section 9 of the Race Relations Act 1976 forms part of the Government's wider amendments to the Act implementing the race directive under Article 13 of the EC treaty.
	The race directive makes it unlawful to discriminate in the areas of employment-related matters, social protection, social advantage, healthcare, education and goods and services—but only on the grounds of racial or ethnic origin. However, our proposals go beyond the requirements of the directive. The proposed amendment to Section 9 of the Act will outlaw discrimination on the basis of colour and national origins as well as on the basis of racial and ethnic origins as required by the directive.
	This means that nationality will be the only grounds on which to justify treating people differently. This will apply to seafarers recruited abroad to work on ships registered in Great Britain, but only in terms of pay, including retirement and death benefits. Parallel legislation will be laid for ships registered in Northern Ireland.
	Over the last few years, there has been a substantial revival in the United Kingdom merchant fleet, with an increase of around 90 per cent in UK registered shipping since 1997. The introduction of tonnage tax in 2000, and the registration reforms of the Maritime and Coastguard Agency have helped to produce a highly favourable environment for shipping. We are determined that this should continue.
	That is the background against which we are laying the regulations to amend Section 9 of the Race Relations Act 1976. For most of the period that the Act has been in force, there has been a sharp decline in the number of UK-registered ships, and therefore in the number of ships that can be subject to UK legislation. However, as I indicated, there has been a huge increase in UK registered shipping since 1997.
	During the public consultation on the implementation of the EC Article 13 race directive, our social partners' views were invited on a proposal to repeal Section 9 in its entirety. After careful consideration, the Government concluded that total abolition of Section 9 of the Act would seriously jeopardise the success we have achieved in reviving UK merchant shipping. This was not a course we were prepared to follow.
	Crewing costs are a substantial proportion of overall shipping costs, and shipping companies are operating in a highly competitive sector. We estimate that the additional costs to shipowners, which could be up to £40 million, incurred by the total repeal of Section 9 would drive many shipping companies to register their ships abroad. Up to 400 ships, possibly more, could leave the UK register, thus removing them from the jurisdiction of the UK with the risk that they could move to less safety-conscious registers.
	All other EU member states are retaining the ability to pay foreign seafarers at different rates. Not to proceed with our proposals could put UK registered ships at a significant commercial disadvantage in a highly competitive market.
	I recognise that there are concerns about paying foreign seafarers at local rates, but I firmly reject the argument that it amounts to employing cheap labour. The local rates may compare favourably with rates for other jobs in the countries concerned. Furthermore, the UK fully supports the current exercise of the International Labour Organisation to consolidate its maritime conventions. That will achieve a workable and enforceable international system of maritime standards for seafarers' living and working conditions.
	The Government are firmly committed to removing discrimination wherever possible. We are also firmly committed to the continued success of the United Kingdom register and of our shipping policy in general. We are convinced that to achieve those objectives the continuing payment of local wage rates to seafarers recruited abroad on United Kingdom ships is absolutely necessary. I beg to move.
	Moved, That the draft regulations laid before the House on 14th May be approved [20th report from the Joint Committee].—(Lord McIntosh of Haringey.)

Viscount Astor: My Lords, I support the regulations. The Government have a sensible balance in terms of employment of people from abroad on British ships. As the Minister said, if the situation changed, it would have a dramatic effect on the amount of tonnage registered in this country. At the same time, we fully support the notion that the Race Relations Act should cover people employed in this way.

Lord Newby: My Lords, the Minister referred to a number of concerns expressed about the regulations, which we understand. On balance, we agree that the Government's course is a wise one.

On Question, Motion agreed to.

Co-operatives and Community Benefit Societies Bill

Lord Carter: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
	Moved, That the House do now resolve itself into Committee.—(Lord Carter.)

On Question, Motion agreed to.
	House in Committee accordingly.
	[THE PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES in the Chair.]
	Clause 1 [Community benefit societies: power to restrict use of assets]:

Lord Carter: moved Amendment No. 1:
	Page 2, line 20, leave out "him to perform" and insert "or assist him to perform any of"

Lord Carter: In moving the amendment, I shall also speak to Amendments Nos. 2 and 3. This group of amendments and the amendment that follows are designed to meet some concerns expressed by the Delegated Powers and Regulatory Reform Committee. I express my thanks to Peter Hunt and the team of the Co-operative Party, Lucy Ryan and her team at the Treasury and particularly to Christine Salmon, the Clerk, and Alan Roberts, the special adviser to the Select Committee. They have all been extremely helpful in drafting the amendments.
	The amendments deal with the first of three observations from the Select Committee on the drafting of the Bill. Members of the Committee may remember that paragraph 29 of the committee's 18th report stated:
	"The Committee considers that the delegation in clause 1(5)(d) would be appropriate only if expressly limited in the bill to a specific purpose such as that described in the Treasury's memorandum".
	The object of the group of amendments is to meet that requirement. Amendment No. 1 is the paving for Amendment No. 2, which is the main amendment in the group, and Amendment No. 3 is consequential on Amendments Nos. 1 and 2. The new subsection (5)(d), as set out on the Marshalled List, meets the point made by the committee. The Treasury memorandum on the subject, addressed to the committee, states that the amendment narrows the scope of Clause 1(5)(d),
	"so that the regulations can only authorise a prescribed person to make binding rules for the purpose of enabling or assisting him to perform his functions under the regulations . . . Prior to full consultation it is not certain exactly what functions may be conferred on a prescribed person".
	The important point now is that any regulations conferring functions,
	"can only make provision for the specific and limited purpose expressly set out in subsection (1): i.e. they can only set up an asset 'lock-in' regime for community benefit societies".
	It goes on to say that,
	"since the regulations are subject to the draft affirmative resolution procedure, they will require approval by a resolution in each House before they can be made. That will give both Houses the opportunity to prevent any regulations that confer functions on a prescribed person, or which authorise a prescribed person to make binding rules for the purpose of enabling or assisting him to perform those functions, which are considered inappropriate".
	I beg to move.

Baroness Wilcox: My noble friend Lord Skelmersdale, who regrets that he is unable to be here at this time, requested the noble Lord, Lord Carter, and the Government to take the report of the committee regarding the Bill on the chin. We are delighted with the amendments proposed today by the noble Lord, Lord Carter, which, I understand, give effect to the committee's findings.

Lord Newby: We on these Benches are pleased that an unexpected glitch at an earlier stage has now been resolved. We fully support the Bill and are pleased that the amendments deal with the earlier problem.

Lord McIntosh of Haringey: The Government support the amendments.

Lord Carter: There is nothing else to say except that I do not exactly remember the phrase "on the chin".

On Question, amendment agreed to.

Lord Carter: moved Amendments Nos. 2 and 3:
	Page 2, line 29, leave out paragraph (d) and insert—
	"( ) authorise a prescribed person to make rules, binding on persons of a prescribed description, for the purpose of enabling or assisting him to perform any of his functions under the regulations;
	( ) make provision as to the making, publication and enforcement of such rules;"
	Page 2, line 33, leave out "carrying out" and insert "performing"
	On Question, amendments agreed to.

Lord Carter: moved Amendment No. 4:
	Page 2, line 38, at end insert—
	"( ) Regulations under this section may not create any new criminal offence punishable with imprisonment for more than seven years."

Lord Carter: The amendment deals with the second matter raised by the Delegated Powers Committee. On the fact that no maximum penalty for criminal liability was expressed in the Bill, the report said:
	"In view of the range of provision which may be made under clause 1, the Committee considers that the delegation in clause 1(5)(a) would be appropriate only if such a limit were included in the bill".
	That is exactly what the amendment does, although it is important to point out that it is not strictly necessary because there are precedents for a power to create criminal offences in secondary legislation that do not specify a limit. One precedent is the Industrial and Provident Societies Act 2002, passed only last year. However, in order to make clear beyond any doubt what should happen, I have tabled this amendment, which limits the maximum criminal penalty that can be prescribed in the regulations to seven years imprisonment. That might sound on the high side, but it is one of the most serious offences that can be created if an officer of a society were fraudulently to use the assets of a society,
	"for purposes not permitted by its asset lock (whether for personal gain or otherwise). Such an offence could potentially be as serious as theft of a charity's assets, or of money which has been collected for a charity and is to be regarded as belonging to the beneficiaries of the charity . . . The maximum sentence upon conviction for theft on indictment is seven years imprisonment",
	under the Theft Act 1968.
	The offences are comparable in seriousness to the potential offence that may be created in regulations made under Clause 1 if an officer of a society were fraudulently to use the assets of a society for purposes not permitted by the asset lock. If the offence were less serious, that would obviously be reflected in a lower penalty. The amendment represents an appropriate restraint on the delegated power to make regulations. I beg to move.

On Question, amendment agreed to.
	Clause 1, as amended, agreed to.
	Remaining clauses and schedule agreed to.
	House resumed: Bill reported with amendments.

Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2003

Lord McIntosh of Haringey: rose to move, That the draft order laid before the House on 12th May be approved [20th report from the Joint Committee].

Lord McIntosh of Haringey: My Lords, in moving the order I should also like, if I may, to speak to the supply of services order, the anticipated mergers order and the protection of legitimate interests order.
	The consumer and competition provisions of the Enterprise Act enter into force on 20th June. The Act implements the Government's pledge to give more independence to the competition authorities. It takes the politics out of competition decisions with decisions on mergers and markets being taken by expert and independent competition bodies. The consumer provisions create a new super-complaints regime to encourage consumer bodies to bring complaints to the attention of the Office of Fair Trading. Part 8 of the Act also strengthens the enforcement of consumer law, extending the successful stop now orders regime—which is known by the terrible name of SNORs.
	I start with the domestic infringement orders. This order sets out the list of domestic legislation that will be covered by the new Part 8 regime. Part 8 is intended to strengthen consumer protection by giving enforcement bodies wider powers to obtain court orders—similar to injunctions—against traders who cheat consumers and who provide unfair competition to honest businesses.
	The new enforcement regime is modelled closely on the stop now orders which came into force in June 2001. Enforcers have been using the stop now regime successfully to stop a wide range of illegal trading practices. Part 8 of the Enterprise Act will implement the requirements of the injunctions directive in place of the SNORs, but will also enable court orders to be made to prohibit breaches of domestic law requirements not covered by the SNORs. Those are termed domestic infringements. The domestic infringements order specifies the legislation and rules of law in respect of which acts or omissions may give rise to domestic infringements. As we promised during the passage of the Bill, we have consulted extensively on the laws to be included in the domestic infringements order, and we have taken account of the responses in drawing up the order we are discussing today.
	A range of mainstream consumer protection legislation is included in the order and is intended to protect the economic interests of consumers. This legislation includes, among other Acts, the Trade Descriptions Act, Section 4 of the Prices Act and certain offences under the Weights and Measures Act intended to protect consumers against short measures. That will enable quick and effective action to be taken against, for example, car traders who purchase high-mileage cars and lower the mileage prior to offering the cars for sale. It will also enable action to be taken against businesses which deliberately cheat consumers by giving them a quantity which is less than they paid for. It will also cover a wide range of other practices which harm consumers, such as counterfeiting and piracy, lottery-like scams and harassment of the elderly or vulnerable into making purchases. The new regime will enable better enforcement where these offences are committed. It also covers legislation on underage sales to children of such things as tobacco and fireworks.
	Most importantly, by including breaches of the implied terms contained in the Supply of Goods and Services Act, the order will enable enforcement action to be taken against traders who fail to carry out a service with reasonable care and skill—such as cowboy builders and dodgy car repairers. That gives noble Lords a flavour of the provisions the order will bring in and the impact it will have. I hope that it will be agreed that this strengthening of enforcement will bring considerable benefits to consumers and also to the vast majority of honest businesses.
	I turn now to the supply of services order. This specifies the circumstances in which permitting or making arrangements to permit the use of land is to be classified as the supply of a "service" for the purpose of merger and market investigations and the enforcement of certain consumer legislation. With the exception of car parks, these types of arrangements were already listed in Section 137 of the Fair Trading Act. We have added car parking primarily for consumer protection purposes. It will enable an enforcement order to be made under Part 8 to prohibit the use of notices in car parks which purport to exclude all liability due to negligence and whose only purpose seems to be to deceive consumers into thinking that they have no rights.
	I turn to the anticipated mergers order, which relates to the merger provisions of the Enterprise Act. This order amends Sections 27 and 29 of the Act, which allow for the reference of completed mergers to the Competition Commission where the events constituting the merger took place over a period of up to two years. The purpose of the order is to apply these anti-avoidance measures to anticipated mergers; that is where all or part of the transaction has not yet been agreed but matters are in progress or contemplation. This replaces similar provision for anticipated mergers that was formerly made in Section 75(4) of the Fair Trading Act 1973.
	Finally, I turn to the protection of legitimate interests order. There are a very limited number of merger cases in which the Government may wish to protect the public interest on non-competition grounds. In those cases the Enterprise Act provides a mechanism whereby the Secretary of State can intervene and decide on particular mergers that raise specified public interest considerations by serving an intervention notice. Apparently, national security is the only public interest specified in the Act. This instrument deals with mergers that fall to the European Community merger regulation—the ECMR. It ensures that the UK can act in ECMR cases to protect important non-competition interests. That is specifically foreseen by the European Community merger regulation itself.
	The Enterprise Act preserves the current position. The UK can use the domestic merger control regime, where necessary, to take action on matters other than competition, such as defence, in relation to cases that fall to the ECMR.
	The order follows the procedures set out in the public interest and special public interest schemes of the Enterprise Act with appropriate modifications. Most of the other provisions of Part 3 of the Enterprise Act are applied with modifications where relevant.
	Those are the four orders for discussion today. They are all required to implement the consumer and competition provisions of the Act which will come into force next Friday. They are important but technical measures, developed in consultation with all interested parties. I commend the first order to the House.
	Moved, That the draft order laid before the House on 12th May be approved [20th report from the Joint Committee].—(Lord McIntosh of Haringey.)

Baroness Wilcox: My Lords, I thank the Minister. If I have it right, we are speaking to all four orders in one go. I therefore turn first to the domestic infringements and supply of services orders.
	While we on these Benches will not be resisting the orders, a number of questions were raised in another place which remain unanswered. The Minister in another place promised a written reply which has not been delivered. I should therefore appreciate reassurance on these matters from the Minister today. The first question was what impact the supply of services order will have on the storage of caravans over the winter where farmers in rural areas have diversified.
	The second question referred to the domestic infringements order, on the issue of consumer protection. The Minister listed many activities to be covered, but I am not sure that he specifically dealt with the one in the question that was asked. The question was as follows. There has been a growing trend of highly threatening rogue traders offering re-tarmacked drives. The job, if completed at all, is very shoddily carried out at a highly inflated price. How will the law be strengthened to provide consumers with protection from those traders?
	As regards the Enterprise Act 2002 (Anticipated Mergers) Order 2003 and the Enterprise Act 2002 (Protection of Legitimate Interests) Order 2003, we on these Benches are happy to support these orders which strengthen measures that can be taken against anti-competitive mergers and acquisitions. The first extends control of completed mergers to cover anticipated mergers as well, and will close a loophole whereby an organisation can avoid regulatory scrutiny by engaging in transactions over a long period of time. Now the authorities will be able to aggregate transactions over two years. This should be beneficial to business competitiveness and consumers alike by preventing organisations from working around the system.
	The protection of legitimate interests order concerns the procedure following the Secretary of State issuing a European intervention notice, and where the matter is one of public interest, it can be referred by the Secretary of State to the Competition Commission. While in principle we are against providing the Secretary of State with more and more powers, these particular orders seem harmless enough and, as I said, we shall happily support them.

Lord Newby: My Lords, we on these Benches also support the orders.

Lord McIntosh of Haringey: My Lords, I am grateful to the noble Baroness and to the noble Lord for their support for the orders. I can answer the question raised by the noble Baroness, Lady Wilcox. I am very sorry that I seem to have a draft letter to Mr Andrew Robathan but I do not have any evidence that it has been sent. It seems to me that it ought to have been sent since the matter was considered in Standing Committee in the House of Commons.
	As regards caravans, the order would bring the arrangements regarding the storage of caravans, particularly on farms over the winter, within the definition of a supply of services for the purposes of the Enterprise Act, but it does not otherwise affect the legal status of those arrangements. It means that where farmers store caravans on their land, a caravan owner may be considered as a consumer for the purpose of the definition of a domestic infringement under Part 8 of the Enterprise Act. If the storage is supplied in breach of any of the laws which may be enforced under Part 8 as a result of the domestic infringement order, action can be taken by the local trading standards officer and any other general or designated enforcer. Farmers who conduct this business in a lawful and proper way have nothing to fear.
	Itinerant tarmac layers are, of course, subject to the same laws as other traders. Orders to stop malpractices by such traders where they can be traced could be obtained if they repeatedly harassed a consumer or if they failed to give consumers notice of their right to cancel the contract—that would be a community infringement—or if they gave the consumer false information about the service they were providing. That would be a contravention of the Trade Descriptions Act. If they failed to comply with an enforcement order, that would constitute contempt of court which would carry the prospect of a term of imprisonment of up to two years. I hope that it will be agreed that that would be a powerful incentive to the person against whom an enforcement order had been made to mend his ways and not engage in such unlawful conduct in the future. I apologise for having to make that statement for the first time.

On Question, Motion agreed to.

Enterprise Act 2002 (Supply of Services) Order 2003

Enterprise Act 2002 (Anticipated Mergers) Order 2003

Enterprise Act 2002 (Protection of Legitimate Interests) Order 2003

Lord McIntosh of Haringey: My Lords, I beg to move the Motions standing in my name on the Order Paper.
	Moved, That the draft orders laid before the House on 29th April and 12th May be approved [19th and 20th reports from the Joint Committee].

On Question, Motion agreed to.

Uncertificated Securities (Amendment) (Eligible Debt Securities) Regulations 2003

Lord McIntosh of Haringey: rose to move, That the draft regulations laid before the House on 6th May be approved [20th report from the Joint Committee].

Lord McIntosh of Haringey: My Lords, we are debating today changes to the legislative structure for computerised securities settlement systems that transfers shares, gilts and corporate bonds electronically, without using certificates. CRESTCo operates the only such system in the United Kingdom.
	The legal framework under which CRESTCo operates its system is provided by the Uncertificated Securities Regulations (USRs). To ensure that the UK securities settlement infrastructure continues to be able to take advantage of opportunities for market developments there has been a rolling programme of reform of the USRs. They were first introduced in 1995, extended in 2000 and then re-enacted with modifications in 2001. The statutory instrument before us today continues that reform by amending the regulations in order to permit the evidencing and transfer of title of electronic equivalents of money market instruments (MMIs).
	The new regulations, by allowing for the creation of electronic equivalents of MMIs, are fulfilling the final recommendation of the Bank of England's Securities Settlement Priorities Review, published in 1998. There has been strong support from the City in favour of allowing these securities to be issued in electronic form, title to be evidenced by names on an electronic register and their integration into the CREST settlement system. Settlement is an important source of revenue and one determinant of the location of financial activity. Since issuers and investors nowadays have an ever wider choice over where they do business, it is essential that the United Kingdom remains attractive to them. The introduction of electronic equivalents of MMIs is another step forward in keeping London the leading international financial centre in the world. It is against this background that the Government are seeking approval for the relevant statutory instrument.
	As I have already said, the statutory instrument will permit the evidencing and transfer of title of dematerialised equivalents to MMIs. MMIs are short-term debt securities; they mostly have a maturity of less than one year. They are used to meet the short-term funding needs of the Government (in the form of Treasury Bills), financial institutions and other companies. Holders of MMIs are almost exclusively companies rather than individuals. MMIs are issued in the form of certificates. They are negotiable bearer instruments meaning that ownership can be passed by physical delivery of a certificate. Each MMI is unique and cannot be used interchangeably with other units.
	Dematerialisation, as the name implies, involves the removal of paper. In order for an MMI to be issued and transferred electronically, it will lose its uniqueness. At the same time it will cease to be a negotiable bearer instrument. This change in characteristic means that while performing the same economic functions, electronic equivalents of MMIs will be distinct securities. In the amended regulations a new electronic equivalent to the MMI has been defined, the Eligible Debt Security or EDS.
	An EDS will be a so-called registered security. Legal title will be provided to the holder by entry of his name on the "Operator Register of Eligible Debt Securities", a computer-held record of ownership. A change in the register will represent a change in legal title. Furthermore, individual EDSs will be interchangeable so increasing flexibility for the issuer of the securities and thus allowing better tailoring to the needs of both investors and issuers. The modified regulations take account of the different legal characteristics of the EDS.
	Legislative change is necessary to allow for the creation of EDSs. The current scope of the Uncertificated Securities Regulations, which make provision for electronic transfer and evidencing of ownership of securities, does not cover EDSs. The regulations we are debating amend the Uncertificated Securities Regulations 2001, to enable Eligible Debt Securities to be settled in CREST and for title to be provided by entry on the Operator Register operated by CREST; that is, electronic transfer of title representing a change in legal ownership. Most of the amendments are technical in nature and designed to facilitate, and give legal backing to, the upkeep of the registers and the transfer of securities.
	The definition of an eligible debt security in the regulations has been deliberately cast in fairly broad terms. The breadth of the definition is intended to maintain sufficient flexibility and at the same time allow for the possible future development of new kinds of securities.
	Why are we making the changes? Basically, there are three reasons. First, they will underpin financial stability by allowing settlement of short-term debt securities to take place in Crest with full delivery versus payment in central bank money. Secondly, they will reduce the costs of raising capital by removing the need to print and store large quantities of certificates. Thirdly, they will help to maintain the UK's competitiveness as a location for financial services by providing a modern and efficient securities settlement environment for London's financial markets.
	Our objective in the amended regulations is a simple one—the electronic legal transfer of title and settlement of eligible debt securities. We believe that the change will enhance the competitiveness of the infrastructure of UK financial markets, and will be warmly welcomed by the City. I commend the regulations to the House.
	Moved, That the draft regulations laid before the House on 6th May be approved [20th report from the Joint Committee].—(Lord McIntosh of Haringey.)

Baroness Wilcox: My Lords, I thank the Minister for that description of the changes required. We broadly welcome the move to modernise the settlement arrangements for UK securities, but I have two questions. I understand that the regulations are part of a process initiated following a consultation document. Do the regulations implement all the changes recommended by the consultation process? Will there be further consultation following the regulations to ensure that all is working smoothly? With those questions answered, we will be happy to support the regulations.

Lord Newby: My Lords, this is another set of regulations dealing with the rapidly advancing death of paper. The legislative framework always seems to be struggling to catch up with very rapid changes in how we do business. As someone who has just moved office and found to my slight surprise that in two years we had accumulated very little paper, which made the move a lot easier, I think it very important that the legislative framework is changed as quickly as possible to catch up with rapidly-changing business practices. On that basis, we support the regulations.

Lord McIntosh of Haringey: My Lords, I am grateful for the favourable reception of the regulations. I have two answers for the noble Baroness, Lady Wilcox. The first is that, yes, this is the end of the implementation of the changes on which consultation took place. The second is that, if there are further changes, there will of course be further consultation in advance.

On Question, Motion agreed to.

Release of Short-Term Prisoners on Licence (Amendment of Requisite Period) Order 2003

Lord Davies of Oldham: rose to move, That the draft order laid before the House on 10th April be approved [18th report from the Joint Committee].

Lord Davies of Oldham: My Lords, the purpose of the order is to lengthen the maximum curfew period spent by prisoners released on home detention curfew on electronic tag from three months to four-and-a-half months.
	Home detention curfew offers eligible prisoners the opportunity to spend the final part of their sentence on curfew at their home address, or another suitable approved address. During the curfew period, which is usually between 7 p.m. and 7 a.m., they are electronically monitored by means of a tagging device and may not leave home. The monitoring equipment is extremely reliable. The tag cannot be removed without damaging it and has tamper-proof mechanisms which operate in such a way that all damage is reported immediately to the tagging contractors. Prisoners who breach the curfew are recalled to spend the remaining custodial period of their sentence in prison.
	At present, prisoners serving sentences of between three months and less than four years may be released on home detention curfew for up to three months before their normal release date. All prisoners must, however, serve at least one quarter of their sentences in custody. Under the present provisions, prisoners serving 12 months or more can receive the full three-month period on HDC. Those serving less than 12 months spend shorter periods under HDC. For example, someone serving a sentence of six months would spend six weeks on HDC, and someone serving a sentence of 10 months would spend two-and-a-half months on HDC.
	The effect of the order will be to increase the maximum period that a prisoner may spend on home detention curfew to four-and-a-half months, while leaving in place the requirement to serve a quarter of the sentence in custody. In practice, there will be no change to prisoners serving less than 12 months, and the full curfew period of four-and-a-half months will apply only to persons who are serving sentences of 18 months or more.
	The order will not increase the size of the pool of prisoners eligible for consideration under the scheme, but those released following the normal eligibility and risk assessment processes will be released for a longer period, so adding to the numbers on HDC at any one time. Of course, the Prison Service has an overriding duty to protect the public, and no prisoner is placed on HDC without being subject to a risk assessment. The Home Secretary has statutory powers to recall any curfewee who breaches his curfew condition. Any offending by a curfewee is also a breach of their licence and can lead to a recall to prison.
	The home detention curfew scheme has been a success in providing prisoners with a smoother and more effective reintegration into the community. Since its introduction in January 1999, the scheme has enabled 70,000 prisoners to rejoin society earlier, while still subject to restrictions placed on their liberty. HDC has an impressive track record. More than 90 per cent of those released on HDC have completed their curfew periods without any problems at all, and less than 2 per cent have re-offended during their period on HDC.
	Where HDC is supervised by the probation service—that is the case for all young offenders and those serving 12 months or more—it provides a valuable tool for probation officers in influencing the behaviour of former prisoners. HDC can be used to keep offenders out of trouble during the early weeks following release when they are most likely to get into trouble. HDC requires curfewees to develop self-discipline, and can therefore bring order to what might otherwise be a chaotic and disordered lifestyle.
	Research shows that governors assess risks very well indeed. Governors release prisoners only when they consider the risk to the public and the risk of breach to be low. Research on the operation of the first 16 months of the scheme published in June 2001 showed that 9 per cent of prisoners released on HDC re-offended in the first six months after release, compared to 40 per cent of prisoners who had not been released on HDC. That is a significant difference, as the House will recognise, and confirms the accuracy of the risk assessments that governors perform.
	In view of the continued success of the scheme, the Government consider that the time is right to lengthen the curfew period further. Carefully assessed, suitable prisoners will be able to return to their families and resume employment or training earlier in their sentences, thereby helping them to make a smoother and more effective transition from custody to leading a law-abiding life within the community. Those were factors identified by the Social Exclusion Unit in its report as important in reducing the risk of re-offending by ex-prisoners.
	The change will have an impact on the prison population. Although not its primary purpose when first introduced, HDC continues to play an important part in helping to manage the prison population by reducing overcrowding at the same time as improving the resettlement and rehabilitation opportunities available for less serious offenders. Presently, some 3,100 people who would otherwise be filling prison places are serving the last part of their sentence on HDC. We expect that the increase in the length of the curfew period will release up to 1,000 further prison places by November, which is the equivalent of two medium-sized prisons.
	HDC has been a highly successful resettlement tool that has enabled prisoners to rejoin their families and the community earlier in their sentence in a structured and carefully monitored way. The fact that such large numbers of prisoners have successfully completed their period on HDC without breaching it or re-offending while subject to the curfew shows that the risk assessment process carried out by governors is working very effectively indeed. I assure the House that governors will continue to maintain their rigorous approach and will release prisoners on HDC only where it is safe to do so. Accordingly, I commend the order to the House.
	Moved, That the draft order laid before the House on 10th April be approved [18th report from the Joint Committee].—(Lord Davies of Oldham.)

Lord Cope of Berkeley: My Lords, the noble Lord has set out the purposes of the order. We go along with what he says, but I want to raise one or two points.
	The noble Lord said that about 1,000 additional prison places will be freed up under the order. He attempted to imply that that was not its purpose but was incidental. But it is no doubt extremely welcome to a Government who have got themselves into a position where the prison population is under great stress and where considerable overcrowding and difficulties are resulting from that.
	The noble Lord laid some emphasis on the figures for re-offending, and encouraged us to believe in the accuracy of the risk assessment that governors make before releasing prisoners. He was right to emphasise the importance of that process. In the end, the public will judge the purpose of the order by whether those released re-offend more or less. So the risk assessment process is extremely important.
	I am encouraged by the figures that the noble gave relating to the period since the introduction of the HDC scheme. The order adds slightly more risk but will be crucial to how the scheme is judged in the long run.

Lord Roper: My Lords, we on these Benches broadly welcome the order. We particularly appreciated the detailed statistics that the Minister provided in introducing it. When the order was debated in another place last month, the Liberal Democrat spokesman, Annette Brooke, asked a number of statistical questions. I am glad that the answers have now been given in this House. We appreciate the effort that has been made to provide them.
	I agreed strongly with the point made by the noble Lord, Lord Cope, about further checking and examining the risks. We need to monitor this operation in order to ensure that it provides benefits, which we believe are important, but that we are not at the same time increasing the risks. We need more information about subsequent re-offending by those who have been tagged. However, there is great scope for making good use of electronic tagging. I believe that the co-operation between the Probation Service and the Prison Service which it provides is also extremely useful. Therefore, we are pleased to see the order before the House today.

Lord Davies of Oldham: My Lords, I am grateful for the response of both noble Lords to the order. I noted the slightly uncharitable phrase used by the noble Lord Lord, Cope; namely, that the Government have "got themselves into a position" whereby there are increased numbers in prison. It is not exactly a case of the Government getting themselves into this position; it is reflective of wider societal developments to which we all have to make an intelligent and effective response. As the noble Lord will know, the issues regarding these orders—just as with issues regarding sentencing—are not directly a matter for government but are decisions of the courts. It is the Government's job to ensure that there are sufficient prison places for those who are found guilty and are obliged to serve a prison sentence, but the merits of this issue are not related to the size of the prison population—although I noted that the noble Lord had reflected on my remarks regarding the effect being equivalent to two prisons and therefore not negligible.
	As I believe the noble Lord was stressing, the efficacy of the concept lies in how effective it is in reducing re-offending. Those are the figures from which we draw support. They have been carefully monitored thus far. That is why we feel that we can extend the period from three to four and a half months.
	However, I take on board what the noble Lord, Lord Roper, rightly said: this process needs to be evaluated carefully. I can give the assurance that that will be the case. We hope that the figures for the re-offending rates of those who have been under a detention curfew continue to show an extremely favourable comparison with the rates for those who come straight out of prison—among whom the re-offending rates are far too high and need to be reduced. Any strategy that we can employ, consistent with public safety and justice, to reduce re-offending rates must be followed.
	The order is based on careful research and monitoring, which will be continued. At the same time, we have evidence to indicate the success of the scheme. That is why we are proposing its extension. I commend the order to the House.

On Question, Motion agreed to.

Referral Orders (Amendment of Referral Conditions) Regulations 2003

Lord Davies of Oldham: rose to move, That the draft regulations laid before the House on 1st May be approved [19th report from the Joint Committee].

Lord Davies of Oldham: My Lords, these draft regulations have been laid in order to make a simple adjustment to the referral order scheme. They have been widely consulted upon and have been welcomed by all those involved in the process, including magistrates, youth offending teams and community panel members.
	At present, the courts are obliged to make a referral order in most cases involving under 18 year-olds who have been convicted for the first time and plead guilty. This change will give the courts greater discretion. They will not be obliged to make a referral order in respect of non-imprisonable offences but will have discretion to make one where they think fit. The intention is that magistrates may still make referral orders for such offences, but in future they will have discretion to choose an alternative sentence where they judge that to be more appropriate.
	As originally intended by Parliament under the Youth Justice and Criminal Evidence Act 1999, the referral order will remain the primary disposal for young people convicted for the first time and pleading guilty. But this change will give more flexibility when it comes to non-imprisonable offences, especially minor and road traffic offences.
	It may be helpful if I remind the House about the main features of the referral order. This is an innovative new sentence for young offenders in that it directly involves members of the local community in tackling youth crime in their neighbourhood. The court specifies the period for which the referral order is to last—between three and 12 months—and the young person is then referred to a youth offender panel—a form of restorative justice. This is chaired by a community member, with at least one other community member and the youth offending team officer in support. The victim will be invited—attendance is not obligatory—and anyone else with a significant investment in the young person's life, such as a family member or maybe a teacher, will also be invited.
	The panel meetings provide the opportunity for young people convicted for the first time, and who have admitted the offence, to be dealt with away from the formality of the court. With the help of the panel the young person is encouraged to face up to the consequences of what he has done, find a way to repair the harm and to agree a contract with a programme to minimise the risks of re-offending. The aim is to reintegrate the young person back into the community and, if the order is successfully completed, the conviction is spent and they are able to put the offending behind them. It it does not work out, they go back to court for re-sentencing.
	This is no soft option—it puts the young person on the spot and makes him answer to other people for his behaviour and play a central part in working out solutions; and it tackles victim and community concerns at the same time. Where victims are willing and able to attend, they can tell the young person at first hand what impact the offence had on them and express their view on what they would like to see in the form of reparation. There have been many cases where victims of offences such as burglary, assault or criminal damage have benefited from participation in this process.
	After piloting, referral orders were implemented across England and Wales in April 2002, so they have been in force nationally for just over a year. We have evaluated the first year of operation and I can confidently say that they are successfully demonstrating community justice in action. The evaluation shows that referral to a youth offender panel can be a positive experience for all concerned—the young offender, the parents who find this a very supportive process and, as I have said, on occasions the victim.
	But drawing on experience so far, and after listening to those involved in the process, we need to make a small adjustment to the scheme to make it more responsive to people's needs. Referral orders involve the direct engagement of all parties and are very beneficial in most cases, but experience has shown that they can be a disproportionate response in some cases involving road traffic offences and the less serious general offences.
	Offences are coming to panels which would be better dealt with more simply; for example, by a fine. Offences such as a 40p fare evasion or driving a moped without a helmet can sensibly be dealt with by the court there and then without the need for input by a community panel—which requires more organisation, is slower and takes up people's valuable time. This amendment will give magistrates the flexibility to pass an alternative sentence in such cases. It will enable the resources required for referral orders to be focused better on the cases which tend to be more complex in terms of their causes or possible solutions.
	I should stress that we are not saying that referral orders will never be appropriate for non-imprisonable offences. Some traffic offences, for example, could have serious consequences and there may be a need to bring home to a young driver the importance of the Highway Code and their responsibility to other road users. But there will also be minor infringements, such as I enumerated earlier, which do not merit the involvement of community panels. By the same token, some minor fare evasions, which constitute dishonesty, may benefit from a referral order. These regulations will give courts the choice, so that the magistrates can make an alternative disposal if they see fit.
	The regulations make a sensible adjustment to the operation of referral orders and accordingly I commend them to the House.
	Moved, That the draft regulations laid before the House on 1st May be approved [19th report from the Joint Committee].—(Lord Davies of Oldham.)

Lord Roper: My Lords, I thank the Official Opposition for giving way. We on these Benches welcome the order. Referral orders are useful weapons in the armoury available to the courts in dealing with young offenders. It is good that although they were initially drafted in a limited and restricted way, the Government now propose to build in a degree of flexibility, thereby giving the courts additional discretion.
	However, we need to be careful that the discretion will not lead to a reduction in the use the courts make of the orders. That would be most unfortunate. I do not believe that it will be the case, but the Government should monitor any changes in the use made of them. We may need to reconsider the matter, but at this stage the order provides additional flexibility to the courts and will enable them to use referral orders with a greater range of appropriate young offenders. We welcome it.

Lord Cope of Berkeley: My Lords, for a long time, I have been on the record making speeches in favour of restorative justice. It has played a valuable part in the criminal justice system. I, too, welcome the greater flexibility provided by the regulations.
	The Minister said that they were not a soft option. That is an important element because they should not be. He also raised the possibility of the victims being present during the process. That can be important in bringing home to offenders the consequences of their actions, but I hope that it is clear that no pressure is brought on the victims to attend such sessions. It can be a traumatic experience for them, having suffered the consequences of an offence.
	Ultimately, it is important that the operation of all such schemes is thoroughly evaluated, particularly in terms of re-offending, to ensure that the best use is being made of them and that appropriate cases are being dealt with. The flexibility which the regulations provide is important, but as a result magistrates and others will need guidance on appropriate cases based on the working of youth offender panels in their area.

Lord Davies of Oldham: My Lords, I am grateful for the response from the noble Lords, Lord Roper and Lord Cope of Berkeley. I indicate to the noble Lord, Lord Roper, that we expect the reduction in the number of referral orders to be about 10 per cent. As regards the point emphasised by the noble Lord, Lord Cope, we expect guidance to be given to magistrates, recognising the flexibility but in no way, shape or form changing the nature of referral orders and their general use for under 18s who have committed a first offence and pleaded guilty.
	While recognising that emphasis, I want to reassure the noble Lord, Lord Cope, that it can be a most salutary lesson for the perpetrator of the crime to come face to face with his victims. However, it would be wrong for any pressure to be put upon victims to play their part. If they are willing to do so, we have no doubt that it will contribute significantly to the young person's awareness of the consequences of his crime. It would be wrong for pressure to be put upon victims and they contribute only if they want to do so. As we gain experience, people may begin to realise the valuable role which victims can play in restorative justice.
	I emphasise that there is no question of the regulations being a soft option. The noble Lord, Lord Cope, is right in saying that they should not be. They are designed to provide an improved opportunity for those who have committed crime to realise the consequences of their actions. However, we hope that they will result in a reduction of the recommittal of offences, for which we all strive, particularly for first-time offenders. That is why the regulations apply directly to them. I commend them to the House.

On Question, Motion agreed to.
	House adjourned at twenty-one minutes before two o'clock.